Here’s the thing…
September 13, 2008
Your home’s value isn’t determined - not even remotely - by the amount of money you want out of it.
Let me back up a second here. I’ve got a couple of excellent buyers, pre-qualed, solid borrowers, solid buyers. So we find what seems like a perfect candidate home and make an offer.
Except the Sellers have listed their home with one of those places that just puts the house into MLS for a fee. And that’s fine, I’m down with that, I’ll negotiate directly with the Seller, no problem. But they’ve never sold a home in an escrow state, they’re using to having lawyers do all the work. They also don’t know how to interpret an FHA offer, or have any clue what the Ameridream program is all about.
You can’t blame them for that; unless you deal with this stuff every day, how could you possibly know the nuances of those programs? I can explain those things, but I’m not allowed to give them advice. Kind of a fine line to walk when you’re sitting in front of someone asking you a bunch of questions about what is best or what something means.
It also means - in this case - that they’re pricing their home based on what they want out of it, and not on what the house is worth. I know this because they were very surprised to learn what nearly the same house sold for 2 months ago. To learn that the price they want is $20k more than what that other house sold for. Because they didn’t realize that other seller paid 6% in closing costs and assistance to their Buyer.
But me and my Buyers knew.
And even presented with that fact, they’re still clinging to their $20k-over-the-last-recent-sold price, because they want more money out of the house. Which brings me back to where we started this post. That your house’s value is never dependent on what you want out of it.
So we’ll keep shopping. Maybe they’ll come around someday. I heard they got another offer and rejected it while considering my Buyer’s offer. How many offers do you suppose it takes to finally learn your house isn’t worth what you think it is?
Guessing the Value of your Home
September 13, 2008
I was cornered the other day by someone wanting me to guess how much their home was worth. I politely said that I couldn’t quote them prices without doing some research, but that I’d be happy to pull some comparable solds for them.
Oh, no, no, no, she says. I just want to know how much you think it’s worth.
Here’s the thing: I will never quote you a price without research. Because - even if we’re just chatting at a party - I’m potentially liable for that price. So if I offhand tell you that I think your home is worth maybe $350,000, and you go sell it to your neighbor for that much, who immediately resells it for the fair market value of $425k, then guess who you’re going to be very angry at?
The crazy thing is, as soon as I open my mouth and give you any kind of advice, I’m potentially creating an implied agency relationship with you, even if we have no formal agreement. And I know most reasonable people are just looking for a little conversation, understanding we’re having casual chat, but there’s the potential that someone will take my offhand comment as firm advice.
So please - if you want me to guess the value of your home, just let me do a little research for you. I’m happy to do that. Really. It’s no problem. And I’m not even going to hound you to sell it afterwards. I promise.
How Long Does It Take To List My House?
September 13, 2008
Question: How long does it take to list a house?
Answer: About 2 minutes if you can sign your name several times quickly. I’ll be right over.
But seriously folks…
Usually, it takes me about a week to get everything I need prepared. If you need to make repairs or paint or otherwise do sprucing, then tack on about 3-4 days once you’re all done for me to get my photographer in there.
I don’t like my listings to hit MLS without complete information and fabulous pictures. I want to be able to answer questions about your property from day one, so I get everything verified and prepared before the listing is entered. Once your listings hits MLS, I’m uploading pictures usually within minutes so no one sees it without photos - only once chance to make a first impression! I want to have my brochures ready and in the house and waiting for that first potential buyer. I want your blog page to go live as soon as the listing does. These things take a little time to prepare.
So if the house doesn’t need any cleaning or painting or sprucing? It takes about a week to go from you signing the listing agreement at our listing appointment to your home being for sale and in the Tucson MLS. It could go a couple days one way or the other, depending on my photographer’s schedule. Trust me, he’s worth waiting for!
The Chances A Short Sale Will Actually Sell
September 13, 2008
I’ve got a buyer thinking about making an offer on a short sale property.
Remember, a short sale is where the owner owes more on the house than they can sell it for. They’re most often incredibly long, frustrating sales, and often, the sales never actually complete. You have to get the lender to agree to take less than what is owed, and, well, I don’t want to go into a huge short sale discussion now, but know that they’re often ugly transactions.
On the plus side, if the listing agent deals often with short sales, knows that they’re doing, then you’ve got a better chance of actually purchasing a short sale home. That’s a better chance, but still no guarantee.
Today, there are 665 single family homes in the Greater Tucson area marked as a short sales in the Tucson MLS. In the last 6 months, 139 disclosed short sales have actually sold.
Which makes the chances of a short sale closing roughly one in five.
Last time I ran that calculation back in March, it was one in ten.
Progress?
Paying for Unexpected Costs during Roof Repairs
September 13, 2008
I had one of my properties re-roofed last week, and the experience really drove home two points for me:
1. If you’re selling a home and it needs a new roof - just put it on now while you have time to gather and compare bids. It’s expensive, yes, but it takes a potential huge objection away from the Buyer as a negotiating tool.
2. If you’re buying a home and the roof needs to be replaced, make sure the Seller is going to be on the hook for any extra costs that might be incurred when the roof is replaced, for any extra damage that the roofers might find. Many times, you can’t get on a roofer’s schedule fast enough to have it all done before close of escrow.
My roofer found a layer of insulation we didn’t know existed and huge patches of dry rot and dry wood termites that we had to correct - which came close to doubling the cost to replace the stupid thing. Can you imagine if you had just bought a house and the roofer bill came in at twice the estimate due to the unexpected damage found underneath old layers of roof? You better make sure that the Seller is going to pay that bill.
Photo via Flickr, courtesy of marielito
The Tucson Home Pricing Game
September 13, 2008
I had a different post planned for today, but thought this would be more interesting.
I’m pricing a home where there have been no solds in the neighborhood for the past 6 months, so I had to go back a little further than I might normally, so that I can extrapolate the current potential market value.
And I must say, normally sold prices don’t line up so clearly over time. Guess which two solds are distressed sales?
And granted, this chart doesn’t take into account the condition of the properties - but I’ll throw in that they range from original (from the late 1970’s) to partially updated and the one I’m pricing is completely remodeled. Of the two active listings, the higher priced one is a partial remodel with 4 poor pictures, while the other one has no interior pictures and a single line description - it’s a relative unknown at this point.
I’ve decided what I think is an acceptable range of values for the property - what say you?
How much is this home worth in today’s market?
Thinking About Showing Instructions
September 13, 2008
When you sell your home in Tucson, there’s a spot in the MLS where you get to tell other agents the rules about showing your home. Can they give you a 30 minute heads up call and then go show it? What if they call and get voicemail? Can they leave a message and just go? How much notice do you need?
It’s really up to you, the seller, to decide what kind of notice you need, but understand that the more difficult you make it to show your home, the fewer agents will show it.
Pretty typical around here is a 30 minute courtesy call, and if the agent gets voicemail, they leave a message and then they just go. As an agent, if you want me to call a home and a work number, I’m more than happy to do so, as long as if I don’t reach anyone, I can just leave messages and go show your home.
I wanted to show a home the other day that said we could come between 10:30 and 2pm on weekdays. Except my client has a full-time job, so we are only out looking nights and weekends.
There was a house I wanted to show last month where I could only show the house by appointment on weekends, but my clients were only in town from Monday through Thursday to buy a home. With cash.
With so much inventory on the market right now, you can’t afford to make your house difficult to show. I realize it can be inconvenient at times to allow showings with short notice, but if we are to sell your home, we’ve got to make it easy for people to see it!
What’s Your Negotiating Style?
September 13, 2008
Home Buyers always ask me: how much should I offer?
I like to ask them how they prefer to negotiate. Are you a low-baller? Or more of a "this is my firm and best offer" sort of person?
Personally, I like to craft offers that I think are just below their threshold of acceptance, to put something in front of a home seller that is just low enough that they aren’t sure they want to take it, but just high enough that it’s tempting for them to just accept it and have it done with, if you know what I mean.
But - as a person buying a home - you need to negotiate in a style that is most comfortable to you, so that regardless of the outcome of the negotiations, you’re satisfied with the process. As an agent who’s worked with many buyers and sellers, I’ve seen all kinds of tactics and strategies. And at one point or another, those strategies have all worked and they’ve all failed. Everyone’s different.
So - what’s your negotiating style?
Range Pricing Reviewed. Again.
September 13, 2008
I’ve talked about range pricing effectiveness earlier here, and then again here when we learned the Tucson MLS doesn’t dictate the stated list price when range pricing a home, other than to say the list price must be within the range somewhere.
I’m always curious to see what sort of marketing works best. After all, the point is to sell homes quickly and for a good price. Knowing what works and what doesn’t is valuable to me and my Sellers.
So we peek one more time at range pricing. As the market changes, so must our marketing. Check out the previous results, then read on.
Over the past 6 months, single family homes only, greater Tucson area:
- 271 out of 3261 homes that sold were range priced, roughly 8%.
- 43% sold for greater than the list price - typically the low end of the range
- Average range between list price and top of range: $21,585
- Average Sales Price for Ranged Priced Homes: $255,841
- Average Sales Price for Non Ranged Priced Homes: $304,122
Let’s look at a smaller area. Central Tucson had roughly 10% of the sold homes over the last 6 months range priced.
| #Sales | Avg Sales Price | Avg Price/SqFt | %SP/LP | |
| Range Priced | 45 | $210,485 | $141.19 | 99% |
| Traditional Priced | 428 | $230,460 | $151.58 | 95% |
There’s a handful of high end sales in there though, so let’s just look at the under $500k crowd for a second:
| #Sales | Avg Sales Price | Avg Price/SqFt | %SP/LP | |
| Range Priced | 44 | $197,542 | $139.57 | 99% |
| Traditional Priced | 415 | $214,033 | $148.79 | 95% |
I think it is interesting that range priced homes go for 99% of the listed price, while traditionally priced homes go for 95% of list. Some sellers build in a bit of negotiating room in their price, so perhaps they are expecting to come down a bit, while the range pricers state their estimated negotiating range up front so that offers come in closer to their range. However, average sales prices and price per square feet is lower across the board for range priced homes.
Last time, when we looked at the Northwest, the range priced homes did better in terms of price per square foot and sales price to list price. Here we see Central is just the opposite.
Ultimately, I think range pricing is a marketing tactic, and like any marketing tactic, it requires judicious use. I don’t believe every marketing technique is appropriate for every home, and certainly that applies to every marketplace as well. Given current Buyer expectations and our current Tucson real estate market, it would seem range pricing isn’t the best pricing strategy at this time.
Range Pricing Policy on the Tucson MLS
September 13, 2008
Just found a document released by the Tucson MLS regarding range pricing.
Range pricing is saying that a seller will accept or counter offers between $X and $Y. It’s basically a marketing technique, trying to get more eyes on the house because it will appear in a wider set of search results, especially with online home shoppers.
The problem is that most of the Tucson home search sites only list one price, so you think a home is priced really well, and then you read the description and realize it is range priced. So what number do you put into the one big price that most people look at? The top of the range? The bottom? Something else entirely?
Turns out, the Tucson MLS says that the seller can decide whether the listing price is set at the low end, the high end, or somewhere inbetween. For example, if a home is range priced between $474,000 and $515,000, then the most visible price listed in the MLS system can be either of those numbers or some other value within the range.
The Tucson Association of Realtors MLS says they won’t interfere in how agents and their clients determine listing price, as such interference arguably invites allegations of fair trade and anti-trust violations. By dictating how agents market their listings, TARMLS would be limiting or controlling the business decisions of agents and their clients, which they believe would invite litigation. Furthermore, they say, compelling the seller to set a list price at the low or high end of the variable range would "place the MLS in close proximity to price-fixing."
Agents are required, however, to disclose range price listings in the first line of the description.
We talked about range pricing last year. I think I’ll re-run those numbers and see if anything has changed. Stay tuned…
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